This is a Shannon Award providing partial support for the research projects that fall short of the assigned institute's funding range but are in the margin of excellence. The Shannon Award is intended to provide support to test the feasibility of the approach; develop further tests and refine research techniques; perform secondary analysis of available data sets; or conduct discrete projects that can demonstrate the PI's research capabilities or lend additional weight to an already meritorious application. The abstract below is taken from the original document submitted by the principal investigator. The ultimate objective of this proposal is to characterize the cellular and molecular basis of vertebrate embryonic neural development. Both classical embryology and modern molecular biology will be used to isolate and characterize genes that play key roles in the formation of the vertebrate neuroaxis. The animal chosen for these studies is the frog Xenopus laevis whose large sized embryo facilitate microsurgical manipulations. The proposed studies will focus on follistatin, a specific inhibitor of activin and one of the two soluble proteins known to direct neuralization in vertebrate embryonic cells. Activin itself belongs to the TGF-beta superfamily of growth factors and has been shown to be involved in mesoderm induction in vivo. By blocking activin, through direct protein-protein interaction, follistatin changes the fate of ectodermal cells from epidermal to a neural fate. Five objectives are described for the next five years. First, we plan to isolate genes regulated by follistatin in vivo. By identifying such genes, we can map out the molecular cascade initiated by follistatin and, thus, the molecular pathway to neural induction. Second, we will address the specificity of follistatin which is generally considered an active- specific inhibitor, however has not been rigorously tested against the newly discovered TGF-beta ligands. We propose to test the effect of follistatin on other TGF-betas in the context of embryonic explants. Third, to determine the function of endogenous follistatin in the embryo, we have proposed strategies to knock-out follistatin function in vivo. Fourth, we will analyze the embryonic mechanisms of neural induction by addressing how a neuralizing signal such as follistatin diffuses and what kind of cell-cell interactions are required for the spread of the signal in vivo. Finally, a simple in vitro bioassay will be used to assess the function of peptide growth factors in patterning neural tissue. In this assay, ectoderm that has been neuralized by follistatin will be exposed to different concentrations of peptide growth factors. The neural patterning function of each factor or combination of factors will be assessed using region specific neural markers in the treated ectoderm. The isolation of factors involved in neurogenesis has immediate health related consequences. Factors which induce neural differentiation in ectodermal and mesodermal cells may provide insights into regeneration of neural tissue in adults and in the long term may provide therapy for diseases involving loss of neuronal cells, including stroke and neurodegenerative diseases such as Amyotrophic Lateral Sclerosis (ALS). The combination of approaches suggested in this proposal should provide opportunities to answer long-standing questions regarding the process of neurogenesis in vertebrates at the molecular, cellular and embryological level.